Quotas:

Pros and Cons

The Challenge
Policy makers and organizations have been working toward achieving gender
diversity for many decades, but progress has been slow and is perhaps even
stagnating. Only 5% of the 500 CEOs on the 2016 Fortune 500 list are women, a mere
27 out of 500. Men are two to three times more likely to hold senior management
positions, a figure that has stagnated for almost 30 years despite widespread efforts to
remedy this imbalance. Employers still lean toward hiring men over women who have
similar qualifications, and the gender wage gap persists in numerous occupations. In
Canada, despite implementation of a “comply or explain” disclosure regime to
facilitate gender diversity on boards of directors, 45% of companies still have no
women on their boards.1 Notwithstanding extensive research on the topic and
widespread diversity initiatives, gender representation remains a persistent problem in
corporate leadership and in the workforce.

Many have believed that it would be enough to develop “gender blind” or “gender
neutral” management practices. The argument has been, if employers introduce
structures and systems that focus on the objective merit of employees and job
candidates, they should be able to overcome discrimination based on implicit or
explicit biases. Yet, these systems seem not to have helped organizations make
enough progress. Even some gender aware policies, such as requirements to fill
candidate pools with underrepresented minorities without setting hard quotas, have
failed to solve the key problem of female representation. At the rate we are going in
North America, achieving 30% female representation on boards of directors, for
example, would require at least 30 years.

Because of this sluggish progress toward gender equality, organizations and policy
makers are increasingly considering the possibility of implementing quotas, particularly
at the level of board directors, to achieve gender parity. Quotas, it is argued, would
jump start the process of achieving equal representation. Yet, the idea of imposing
quotas on employers – even only at the level of the board of directors – has been met
with resistance. As a result, quotas have remained shrouded in controversy about their
expected benefits and potential pitfalls.

Recently, leading scholars gathered to debate this question during the Gender and
the Economy Research Roundtable held at the Rotman School of Management at the
University of Toronto. In the format of an Oxford-style debate, Professors Tiziana
Casciaro (University of Toronto, Rotman School), Aaron Dhir (Osgoode Hall Law School,
York University), Lisa Leslie (NYU Stern School) and Nico Lacetera (University of Toronto,
Institute for Management and Innovation; National Bureau of Economic Research)
presented their research-based arguments for and against quotas as an important
and useful tool for achieving gender equality in the workforce. The points below are a
summary of the main arguments made in the debate.

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Why quotas might not work
Research suggests that there might be a number of reasons for being concerned
about the effect of quotas.

• Illegal or perceived as unjust. In some jurisdictions, quotas may violate legislation. In

the United States, for example, constitutional law would likely present
insurmountable obstacles to the promulgation of a quota-based regime. Even
where quotas are legal, people may interpret quotas as a violation of perceptions
of justice at the individual level, even if they are creating more fairness in terms of
gender distribution at the societal level. From a psychological perspective, any
gain for one group (in this case, women) is often perceived as a loss for another
group (in this case, men), leading men potentially to perceive quotas as unfair.

• Potential stigma. One risk is that those women who are included in boards due to
the imposition of quotas might be stigmatized. There is a possibility that they will be
seen as less qualified and only on the board because of the quotas. This may hurt
their ability to contribute to board discussions and undermine their effectiveness.
This is particularly true if women are added to boards at token levels. Evidence
suggests that a single woman on a board will likely be marginalized or
delegitimized.

• Reduced employee engagement. Perceptions of unfairness can trigger

unintended negative consequences. Employers who impose quotas may become
less attractive to male job applicants. Quotas may also lead to low engagement
and negative job attitudes among male employees. Furthermore, this perception
of unfairness may cause men to become less supportive of diversity policies than
they were prior to implementing quotas.

• Reduced support for diversity initiatives. Research has long established that people
can be motivated by intrinsic (personal) or extrinsic (externally provided) rewards.
Quotas act as an extrinsic motivator because they are a rule imposed externally
that forces managers to behave in a certain way. Psychological research has
consistently shown that when someone else forces or rewards people for doing
something, they become less motivated about the task: they attribute their
motivation to coercion. In the case of quotas, even if employees personally
believe in working toward gender diversity, imposed quotas can make them
believe that they only care about diversity because the company wants them to,
not because they do personally. Indeed, research suggests that external prompts,
such as mandatory diversity training or grievance systems, are associated with
negative impacts on the representation of women.

• No trickle down. Much of the conversation about quotas has focused on assuring
that more women are represented on corporate boards of directors. This has the
effect of democratizing access to opportunities in an important area of leadership.
However, there is evidence that such quotas fail to lead to broader organizational
impacts. For example, the quotas implemented in Norway did result in women
holding 40% of board seats, but the positive effects in the boardrooms did not
trickle down to lower levels in companies. A study showed that the benefits were
strictly limited to the board level, and underrepresentation and wage disparities
persisted at all other levels. For those who have argued that greater proportions of
women on boards are correlated with performance, little evidence was found in
Norway to support this claim.

• Failure to address underlying discrimination. Evidence from Norway suggests that

quotas may not change anything about the deeper-rooted problem. For example,
many Norwegian companies delisted from the stock exchange at the time quotas
were imposed (though some of this may have been due to a contemporaneous
modification in rules that changed the requirement that financial firms had to be
public). In the early days of the quota implementation, a small group of women
called the “golden skirts” came to hold several board positions at different

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 organizations. Quotas merely require a certain number of women to be present in
a workplace, and this imposed number can distort the real purposes for promoting
gender parity and diversity.

Why quotas could work

Yet, other evidence suggests that concerns about the negative impacts of quotas
may be overblown.

• Fears not realized. In interviews of board members in the US and Europe, it

appeared that there is hostility toward quotas in countries that don’t have them
and enthusiasm for quotas in countries that do have them.2 In other words, only
those who were unfamiliar with quotas thought they were a bad thing. Indeed,
when examining the lived experiences of board members in Norway, there was a
strong narrative of change.3 While directors in the Norwegian companies had
initially strongly opposed quotas, once quotas were imposed by the government,
the directors eventually changed their minds. According to these directors, their
fears were unfounded, and, after a period of transition, they felt that the increased
representation of women on boards actually improved overall governance and
decision making. One analogy that some have made is to that of banning smoking
in restaurants and bars. These policies – initially vehemently opposed by business
establishments as risking financial losses – now are widely accepted and favorably
viewed as a public good by almost everyone.

• No pipeline problem. An initial question about imposing quotas is always: where will
we find the women? A survey of more than 1,000 board members found that men
attributed the existing imbalance to a lack of women in the candidate pools,
whereas women explained it as a function of established closed male networks
and biases. While in Norway, there was an initial “golden skirt” effect where a few
women held many seats, after a few years this problem resolved itself and now
there are many different women represented on the country’s boards of directors.
The imposition of quotas led boards to search more creatively and expansively for
board members – beyond their Rolodexes – and this dramatically increased the
candidate pool.

• No stigma. Evidence from the Norwegian experience suggests that few female
board members who had been beneficiaries of the quotas reported feeling
stigmatized or isolated. This was in part because with a 40% quota, women
achieved a critical mass on every board. At 40% representation, a group is no
longer marginalized. Simply having enough women is a means for countering the
potential negative stigma, while adding only one or two women leads to
tokenization and delegitimization.

• Positive effects. Research suggests that insisting on a critical mass of women on

boards can lead to several benefits in terms of board governance, including more
robust deliberation, disruption of groupthink, more effective risk management,
higher quality monitoring of management, and more systematic work.4 Indeed,
because searches for women board members often lead to candidates who may
not fit the typical profile, women end up bringing more diverse experience in a
wider variety of functional areas than men – often adding skills in the areas of HR,
government relations, and marketing that might have been lacking.5 The new
women board members introduced new viewpoints not previously considered.

• A useful shock to the system. A sample research has established, gender biases are
built into many organizational systems and human decision making processes.
Psychological research shows that we are susceptible to unconscious biases and
stereotypes. Additionally, research tells us that we form networks with others who
are socially similar to ourselves. As a whole, these unconscious processes are
deeply embedded in individuals and organizational systems, and it is unrealistic to

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 expect that these will disappear without an abrupt external shock. Under the
Canadian “comply or explain” approach to board diversity, the primary
explanation offered by companies who do not adopt gender targets is that they
recruit “based on merit.”6 However, research shows that supposedly meritocratic
systems are as susceptible to these biases as other systems (and perhaps even
more).7 Thus, quotas provide a stringent and structured framework to overcome
these unconscious biases such that there is less room for unintended discrimination
to emerge.

Next steps
We can glean advice from this debate about what mistakes and pitfalls to avoid
when enforcing quotas – or more broadly, affirmative action programs – and what
some alternatives to this form of action may be.

If you do impose quotas, how can you avoid the

pitfalls?
The debated suggested that quotas can be very effective and even well-received if
implemented with care. Some actions include:

• Change the narrative. There is evidence that how affirmative action plans are
framed matters. In particular, when decision makers justify an affirmative action
(quota) plan because of the need to remedy past discrimination or the desire to
increase diversity, they reduce negative reactions to the policy. Alternatively, just
saying that a certain group is underrepresented increases negative reactions.8

• Establish a critical mass. A quota of 20% women is unlikely to perpetuate any

positive change and will instead incur negative reactions. As shown in interviews
with female directors in Norway, marginalization becomes difficult when 40% of the
workforce are women. This is a potential difficulty with the “comply or explain”
approach. It may lead boards to make incremental progress, adding one woman
at a time. Where there is low representation, then the risks of stigmatization and
tokenism increase.

• Expand your search. To avoid the problem of having the same small group of
women getting appointed to various different boards or positions – termed
“golden skirts” in Norway – employers should be actively seeking and reaching out
to women so they have a large qualified pool from which they can extract large
numbers of qualified women.

• Expand your definition of the ideal candidate. There are competent and qualified
women out there, but companies must look beyond their typical circle of
recruitment and reach out. Research has shown that people have prototypes
about the ideal worker, or the ideal leader, which is typically male. Recruiters need
to expand their idea of an ideal candidate beyond the male prototype and
create a large pool of qualified female candidates.

• Provide support to facilitate quota implementation. Simply imposing a quota is not

enough, and there should be support in the form of policies to facilitate quotas. For
example, parental leave policies and work re-entry programs for both men and
women should be in place to avoid potential pitfalls and help smooth out the
process.

• Expect some discomfort. Moving to quotas may not be a smooth process. Even in
Norway, where there is general satisfaction with quotas now, there was a period of
transition. Organizational change is never easy, but it is the price to pay for the
benefits.

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If you don't use quotas, how can you make enough
progress? 9,10

The debate suggested some tools for making change without using quotas. These
include:

• Engage in targeted recruiting. Reach out and find women to apply for jobs and
offer them resources for training, but do not impose a required number of women
to be hired. Research shows that the larger number of women in your candidate
pool, the higher the chance you will hire a woman. Recent research has shown
that when you have just one woman in the finalist candidate pool, there is
statistically no chance that she will be hired.11

• Provide voluntary opportunities for diversity training. Voluntary diversity training for
managers are programs where they can voluntarily sign up for training sessions that
teach them the benefits of diversity and how to reduce unconscious bias. These
programs, when voluntary, have been shown through research to increase
diversity efforts and beliefs, and increase the number of women and minorities
hired.

• Appoint diversity managers. Designating specific roles dedicated to creating and

sustaining diversity at the workplace will signal that the organization is committed
to diversity and will create more awareness about diversity issues. Research has
also shown that appointing diversity managers increases social accountability, or
the desire to look more fair-minded for other managers, and increases the hiring
rate of women and other minorities.

• Create corporate diversity task forces. Effective task forces include department heads
and other line executives as well as members of underrepresented groups. Task
forces can analyze information on diversity for the whole company, for business
units, and for departments to figure out what needs attention and then develop
action plans for change. These task forces also help promote social accountability of
the organization as a whole.

• Hold people accountable. One form of accountability is through transparency, as

research shows that people monitor their own biases when they expect that others
will see what decisions they make. A second form of accountability is through
external monitoring, in which achieving diversity targets is part of a person’s
compensation and reward system.

The debate helps bring research-based evidence to change the conversation

about quotas.

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Suggested reading list for more information
Dhir, Aaron A. Challenging boardroom homogeneity: Corporate law, governance,
and diversity. Cambridge University Press, 2015.

Dhir, Aaron A. “What Norway Can Teach the U.S. About Getting More Women Into
Boardrooms.” The Atlantic. Atlantic Media Company, 4 May 2015.

Dobbin, Frank, and Alexandra Kalev. “Why Diversity Programs Fail.” Harvard Business
Review. Harvard Business Publishing, Aug. 2016.

Johnson, Stefanie K., David R. Hekman, and Elsa T. Chan. “If There's Only One Woman
in Your Candidate Pool, There's Statistically No Chance She'll Be Hired.” Harvard
Business Review. Harvard Business Publishing, 26 Apr. 2016.

Kaplan, Sarah (2015). “Meritocracy: From Myth to Reality.” Rotman Magazine (Spring:
48-53)

Wiersema, Margarethe, and Marie Louise Mors. “What Board Directors Really Think of
Gender Quotas.” Harvard Business Review. Harvard Business Press, 14 Nov. 2016.

References cited in summary

1 CSA Multilateral Staff Notice 58-308
Staff Review of Women on Boards and in Executive Officer
Positions – Compliance with NI 58-101 Disclosure of Corporate Governance Practices, September
28, 2016
2 Wiersema, Margarethe, and Marie Louise Mors. "What Board Directors Really Think of Gender
Quotas." Harvard Business Review. Harvard Business Press, 14 Nov. 2016.
3 Dhir, Aaron A. Challenging boardroom homogeneity: Corporate law, governance, and diversity.
Cambridge University Press, 2015.
4 Dhir, Aaron A. Challenging boardroom homogeneity: Corporate law, governance, and diversity.
Cambridge University Press, 2015.
5 Kim, Daehyun & Laura Starks, Gender Diversity on Corporate Boards: Do Women Contribute
Unique Skills? American Economic Review: Papers & Proceedings, 106(5): 267-27
6 CSA Multilateral Staff Notice 58-308
Staff Review of Women on Boards and in Executive Officer
Positions – Compliance with NI 58-101 Disclosure of Corporate Governance Practices, September
28, 2016, p. 6.
7 Kaplan, Sarah (2015). Meritocracy: From Myth to Reality. Rotman Magazine (Spring: 48-53)
8 Harrison, D. A., Kravitz, D. A., Mayer, D. M., Leslie, L. M., & Lev-Arey, D. (2006). Understanding
attitudes toward affirmative action programs in employment: Summary and meta-analysis of 35
years of research. Journal of Applied Psychology, 91, 1013-1036.
9 Dobbin, Frank, and Alexandra Kalev. "Why Diversity Programs Fail." Harvard Business Review.
Harvard Business Publishing, Aug. 2016.
10 Dobbin, F., Schrage, D., & Kalev, A. (2015). Rage against the Iron Cage: The Varied Effects of
Bureaucratic Personnel Reforms on Diversity. American Sociological Review.
11 Johnson, Stefanie K., David R. Hekman, and Elsa T. Chan. "If There's Only One Woman in Your
Candidate Pool, There's Statistically No Chance She'll Be Hired." Harvard Business Review. Harvard
Business Publishing, 26 Apr. 2016.